“Embrace the unexpected” is the mantra for investors in the developing markets of Eastern Europe, Russia, the Middle East, and South Africa, according to Raj Sinha, head of equity research for EEMEA and LATAM for HSBC.
“These markets have experienced a lot of volatility over the past six to 12 months due to a range of geopolitical events, supply chain disruptions, the impact of oil prices, and inflation more broadly across the region,” he said. “This has led to a change in the Emerging EMEA landscape and constituents.”
This includes an increasing investor interest in the Middle East, and Saudi Arabia in particular. Sinha reported that Vision 2030 — the Saudi government’s sweeping aim to diversity its economy and quality of life for its citizens — has seen tangible progress recently.
Sophie Warrick, head of EMEA Equity Research at JPMorgan Chase & Co., likewise reported a shift toward the Middle East, North Africa, and Saudi Arabia, both on the secondary side in categories like index weights and trading volumes as well as in primary markets. Gulf Cooperation Council countries are “now about 60 percent of Emerging EMEA by index weight,” she said. “While the geopolitical events in CEEMEA in the last 12 months accelerated this transition, the emergence of Saudi has also been on the back of its economic growth, pegged currency, and rapid capital market development. Investors are working hard on getting up to speed; understanding the macro stories, getting to know the companies bottom-up and traveling to the region, especially Saudi, in some cases for the first time. Our strong local franchise combined with global client reach has allowed us to be at the forefront of this shift.”
Participants in Institutional Investor’s annual Emerging EMEA Research Team ranking agree...